The Trading Philosophy of Trader Painter

1. About the Trader Painter

The core of trading is "people"; a person's experiences, background, personality, and financial attributes determine the development of their trading strategy.

1. What is Painter's trading strategy?

1. Capital volume and allocation:

• Position the cryptocurrency market as a super high-risk market, allocating no more than 30% of total assets.
• Main capital allocation is on medium to low-frequency quantitative trading (trend strategy), ensuring no missed opportunities in each bull market and no holding on stubbornly in each bear market.

2. Expected returns and acceptable drawdown:

• Ideally, the annual return without leverage is about 50%. With two times leverage and long-term compounding of funds, the return rate will be higher.
• Set a stop loss for every trade, and it is recommended to set a loss limit of 2%-5% of the principal for each trade. Control the drawdown of a single trade and maintain emotional stability.

3. Trading Logic:

• In the cryptocurrency market, trends are the source of all profits.
• Use time as leverage, not capital.
• Long-term survival and waiting for the liquidity bonus cycle is the most effective strategy.

2. Why did Painter develop such a trading strategy?

1. About Quantification

• Entered the market in 2018, with two years of subjective trading yielding no profits. After the "312" crisis in 2020, started quantitative trading and recognized the patterns of market operation, leading to profitable trades.
• The main capital allocation is on medium to low frequency quantitative strategies, leaning towards trend types. Trend strategies buy after significant price increases and sell after significant price decreases, which may seem counterintuitive but actually follow market trends.
• It is recommended to let robots execute feasible quantitative strategies to avoid human emotional interference. Quantitative strategies perform long-term data fitting to achieve positive return expectations through multiple trade executions.

2. Regarding risk control

• Define cryptocurrencies as ultra-risk assets. The first step to achieving long-term stable profits is to learn how to control risks.
• Before starting trading, consider how much you are willing to lose, formulate a trading plan, and strictly adhere to it.

3. What type of person is the Painter trading strategy suitable for?

Suitable for those who want to take trading seriously. It can help develop good trading habits and is the starting point for a true trader's journey.

II. The Trading Story of Painter

1. Why was there a crash of "805"?

The main reason is the Japanese Yen Carry Trade:

1. The bull market following the approval of the Bitcoin ETF is driven by the Japanese yen Carry Trade.

2. The Bank of Japan's interest rate hike, combined with the expectations of an economic recession in the United States, has led to increased repayment pressure on Carry Trade funds, resulting in sell-offs.

3. From the perspective of market supply and demand, significant liquidations after a long period of volatility are also inevitable.

2. What stage is the cycle currently in? How should we operate?

1. About Trend Judgment

• In the washing phase or early stage of a liquidity bull market (refer to 2017 and 2021)
• The current market is primarily driven by the yen arbitrage interest rate differential, which is different from a true liquidity bull market.
• The next bull market is expected to arrive around mid-2025 or in the third quarter.

2. Regarding operational suggestions

• Buy the dip with 10% of the position whenever the price hits a new low.
• For altcoins, performance may surpass Bitcoin when liquidity is sufficient. Consider entering a position when it drops near previous lows.

3. When will the transaction expire? What is the Stop Doing List?

1. Every strategy has a profit period and a drawdown period. The current volatile market is unfavorable for trend strategies.

2. Stop Doing List:

• Never make big mistakes, avoid large drawdowns that damage capital and mindset.
• Do not expect "a wave of recovery" as it can easily lead to high leverage and heavy positions.
• Long-term profits rely on the accumulation of countless small profitable trades, rather than a single large profit.

3. Painter's 【Must Read】

1. Favorite Trader

1. YouTube blogger Luo Sheng
2. Fatty ("Legendary Trader" of the bull market from 2019 to 2021)

2. Recommended Books

1. "Turtle Trading" (Dennis)
2. Wyckoff Method
3. "Advanced Trend Technical Analysis"